Board Oks 15% cash dividends to shareholders
KUWAIT CITY, March 20: Kuwait Finance House (KFH) held its annual general Assembly meeting (AGM) with a 79.849% quorum and approved the Board of Directors’ recommendation of distributing cash dividends of 15% and bonus shares of 10% to shareholders.
Chairman’s Message- Hamad Abdulmohsen Al-Marzouq
Chairman of Kuwait Finance House (KFH) Hamad Abdulmohsen Al-Marzouq said: “On behalf of myself, my fellow colleagues, and members of the Board of Directors of Kuwait Finance House (KFH), I would like to present to you the 2022 KFH Group Annual Report including major achievements, consolidated financial statements and other technical and administrative reports.”
In the beginning, I would like to refer to KFH Extraordinary General Assembly resolutions in its meeting on Monday 25th July 2022 which included authorizations to the Board of Directors to execute the acquisition of Ahli United Bank – Bahrain.
We are pleased to assure our shareholders that the Board of Directors has, by the grace of Allah, executed all resolutions passed by the Ordinary and Extraordinary General Assembly meetings concerning KFH successful acquisition of 100% of AUB-Bahrain shares.
The year 2022 witnessed the conclusion of AUB-Bahrain acquisition deal, a successful and promising strategic project which has taken several years to finalize. The project represents a new pivotal era in KFH journey which is no less in its significance, opportunities, and challenges than KFH inception around 45 years ago. The acquisition has rendered KFH as the largest bank in Kuwait and the second largest Islamic bank worldwide. KFH market capitalization increased to more than KD 10 billion. KFH dominates more than 25% of the Premier Market weight which represents around 80% of Boursa Kuwait. If the past years can be named by the most significant achievements therein, then the year 2022 should be named the “Acquisition Year”.
The acquisition was a well-studied optional challenge which KFH took on with remarkable ability and flexibility, thus overcoming several challenges. The date 6th October 2022 marked the beginning of trading on the new entity in both Kuwait and Bahrain stock exchanges, transfer of the acquired bank shares fully to KFH, increase of capital to KD 1,342,223,324.800 (One Billion, Three Hundred Forty-Two Million, Two Hundred Twenty-Three Thousand, Three Hundred Twenty-Four Dinars & Eight Hundred Fils) which was preceded by the endorsement of the shares exchange ratio at 2.695 of AUB shares against each KFH share. We have ensured during all stages that dealing with the acquisition project was made with transparency as KFH presented approximately 80 disclosures concerning the acquisition resolutions and steps. Also, we have organized 7 press conferences and interviews for the same purpose to make the project a success by the grace and blessings of Allah.
I would like to avail myself of this occasion to thank the shareholders for their trust and support, the regulatory authorities in Kuwait and Bahrain for endorsing the acquisition, local and global consultants, and the team which participated in the arrangement of the deal which was compatible with the interests of all parties, financial safety considerations and trademark value. Looking forward, I would like to emphasize that the success we have achieved is just another step on a road that demands further endeavor so that our shareholders would reap the benefits and we achieve our goals i.e., ensuring a diversified flow of income, entering new markets e.g., the UK and Egypt, utmost utilization of available advantages, expanding the scope of our competitive capabilities, maximizing our shareholders investments and achieving profit for our customers and depositors.
In the midst of economic challenges, KFH continued its initiative and leadership efforts which have characterized KFH business under a clear integrated strategy that focused on boosting the core banking activities to achieve sustainable profitability and growth. The strategy covered all other related requirements in the fields of digitalization, human resources, financing and investment products, social activities and humanitarian contributions while adhering fully to Sharia regulations which is KFH business methodology.
Our products have exhibited real economic value. KFH has made substantial progress in elevating innovation, digitalization, artificial intelligence, and business leadership, setting an example for Islamic banking of the future. Reforms continued at a larger pace to increase revenues, optimize costs, and maintain profit ratios through the implementation of the best responsible banking practices and risk management. The year-end financial indicators have affirmed the sound performance, balanced arrangement of priorities, creditworthiness, efficiency, and durability of conditions, thus enhancing KFH Group outstanding position and emphasizing its ability to encounter foreseeable uncertainty of global economy. KFH is still enjoying high liquidity, solvency, diversified financing portfolio and a remarkable provisions coverage. While we hope for the operating environment to improve, we are still optimistic about the continuity of valuable dividends as KFH dividends policy has always been stable.
By the grace of Allah, KFH has achieved a net profit distributable to shareholders reaching KD 357.7 million i.e., an increase by 47.0% compared to last year. Earnings per share reached 33.58 Fils i.e., an increase by 29.2% compared to last year.
KFH Group profits for the year 2022 included Q4 profits of AUB Group, effective as of the date of the share ownership on October 2 till the end of the year, reaching KD 62.5 million according to the international accounting standards applied in Kuwait. We look forward in 2023 to seeing full year profits of AUB Group included in KFH profits.
Net financing income increased to reach KD 800.5 million i.e., an increase by 36.7% compared to last year.
Total operating income increased to reach KD 1,072.3 million i.e., an increase by 32.2% compared to last year.
Net operating income increased to reach KD 723.3 million i.e., an increase by 43.8% compared to last year.
Total assets reached KD 37.0 billion, marking an increase of KD 15.2 billion or 69.7% compared to last year.
Depositors’ accounts reached KD 22.5 billion, marking an increase by KD 6.6 billion or 41.7%. Capital adequacy ratio reached 17.66%, taking into consideration the recommended dividends.
The Board of Directors has recommended to the General Assembly distribution of 15% cash dividends and 10% bonus shares to shareholders, considering the distributed returns on investment deposits and saving accounts as shown in the following table:
Depositors Profit
Account Type 2022 2021
“Khumasiya” Investment Deposit 4.000% 1.700% “Mustamera” Investment Deposit 3.500% 1.450% “Sidra” Investment Deposit 2.325% 1.100% Dima Investment Deposit (12 months) 2.725% 1.275% Dima Investment Deposit (6 months) 2.225% 1.150% Long term investment plans 2.550% 1.225% Investment Saving Accounts 0.230% 0.200%
KFH succeeded in introducing a new generation of digital banking services as part of its comprehensive trend to digitalize all functions, services, products and means of providing such services, thus reinforcing our position to utilize and invent the best tools of financial technology. KFH has exclusively provided highly distinguished banking services at the banking sector level e.g., opening bank accounts online for non-KFH customers through interactive XTMs. IT sector has executed more than 33 systems, programs and automated services covering various aspects of business, developed IT infrastructure, cyber security buffers, accelerated regulatory reports issuance and introduced new solutions to enhance joint relationship with regulatory authorities.
Systems and programs have been provided for the new products in the field of
cards, finance, operations, real estate valuation and Ijarah, in addition to the Digital Print project at branches, online cash transfer service, enhancement of Trade and e-payment SMS, banking cards issuance systems with 5 years validity and strengthening privacy protection policies.
Group Operations Sector achievements have enhanced digital transformation using robotic technology RPA, and artificial intelligence in the fields of clearance, cards, digitization of all paper files for trade finance, payment and documentary cycle on Easy Way system. The Digital Print project should ensure the transformation of all transactions to e-documents. Moreover, the transfer of Procurement Department to Operations will improve supply chains.
In corporate finance, KFH digitized transactions to facilitate transactions. KFH acted as the lead arranger of a KD 216 million syndicated finance deal in favor of Agility Company. Meanwhile, we continued to provide finance to small companies to enhance their role and support the national plan, as part of KFH’s support to this segment. Also, we increased the number of corporate banking branches to 11 branches. Risk Department implemented an early warning program for credit risks at the Group level to mitigate costs and enhance profitability.
As part of its efforts to support innovation, technology and business leadership, the Digital Transformation Department has exerted significant efforts to establish business models among departments and with corporate customers and to spread technology culture among employees.
Group Treasury relentlessly expanded its investment and trading activities in Primary and Secondary Capital Markets. Treasury Dept. executed transactions worth more than USD 13 billion during 2022. Meanwhile, it continued to expand its trading of the short-term Sukuk of International Islamic Liquidity Management (IILM). KFH Group Treasury maintained its leadership position in IILM Market Making and won the top rank Primary Dealer for the 6th time and consecutive 2nd year in a row for Secondary Dealer from amongst several international and regional banks by IILM. Also, it expanded its exposure to green Sukuk and participated in Sukuk compatible with environment, social and corporate governance (ESG).
Group Treasury FX transactions exceeded USD 70 billion. Also, the department built a new partnership with a leading global bank to be its only Market Maker for GCC currencies. Furthermore, it introduced fully automated live FX prices for retail customers through ATMs. Also, it added the corporate FX platform “KFH Global” to improve transaction timing and provide live ratings for customers. Accordingly, several companies were brought onboard as customers of the Group.
The Group Financial Institutions Unit continued to develop its interbank facilities portfolio through its participation in financing two international syndicated facilities for two regional banks in the GCC region exceeding USD 2 billion in value.
KFH Capital, the investment arm of KFH Group, arranged the issuance of more than USD 6 billion Sukuk comprising sovereign and corporate Sukuk. Also, it acted as Lead Manager and Bookrunner for several issuances around the world.
On the employee engagement side, KFH Group continued to lead in the achievement of market leading engagement results compared to its peers and high performing organizations where we have achieved an engagement level of 83% on the Group Level. Capitalizing on the successful track record in this, KFH was the first bank /company in Kuwait to be awarded by “The Brandon Hall Group” who operates the largest and most prestigious awards program for Human Capital Management where KFH has competed with the top corporations on the global level.
As we review 2022 events and the achievements made, we proudly convey our sincere thanks and gratitude for the efforts exerted by KFH Group members and all departments and sectors, which have reflected positively on the best services provided to our customers and enhanced our shareholders and strategic partners’ trust. We look forward to continuing our endeavor to achieve KFH, shareholders and customers aspirations.
Our vast banking experience enables us to maintain a long-term commitment towards our shareholders and enhance prosperity in the markets where we operate. We have witnessed remarkable improvement in the financial positions of subsidiaries despite the challenges and our need to encounter certain structural credit pressures resulting from the economic developments in their countries and regions. We anticipate continuing the achievement of long-term growth, benefiting from income increasing opportunities, improving efficiency and boosting our offers and services.
The values of initiative, compliance and quality will always remain as the main pillars of our social role and contribution to society. We believe that sound governance is reflected not only in achieving financial stability and complying with regulatory requirements but also in taking into consideration society development and environment sustainability. Accordingly, KFH introduced several environmental and sustainability initiatives and signed partnership agreements with government and private entities for the protection of environment as part of the (Keep it green) campaign.
KFH enjoys a track record of social responsibility as it made different social contributions inside and outside Kuwait e.g., signing a memorandum of understanding with Kuwait Municipality for the design and restructuring of the areas damaged in Mubarakiya market fire incident. Work includes the development of the market with estimated cost of KD 8 million. Social contributions also included the settlement of the debts of troubled debtors who have habeas corpus orders issued against them by court. Total debts amount exceeded KD 20 million benefiting around 10 thousand troubled debtors in cooperation with the Ministry of Justice.
KFH also provided support to the Kuwaiti Red Crescent Society in its social and aid initiatives where total value of contributions during 2022 approximated KD 4.5 million.
Along with its outstanding creditworthiness that has been affirmed by global credit rating agencies, KFH received during the year 23 valuable banking awards from global organizations specialized in the follow up and evaluation of top banks activities.
Meanwhile, we will continue to focus our efforts on enhancing our business model and achieving sustainable and joint added value for stakeholders. We focus on customers, innovation, digital banking, green finance, governance and social responsibility.
Finally, I would like to convey our sincere thanks, gratitude, and appreciation to His Highness the Amir of Kuwait Sheikh Nawaf Al-Ahmad Al-Jaber Al-Sabah, may Allah safeguard him, His Highness the Crown Prince Sheikh Meshal Al-Ahmad Al-Jaber Al-Sabah, may Allah safeguard him, and His Highness, the Prime Minister Sheikh Ahmad Nawaf Al-Ahmad Al-Sabah. Our thanks and appreciation are also extended to the Central Bank of Kuwait and regulatory authorities for their continuous support to the banking sector in the State of Kuwait.
May Allah grant us success Acting Group Chief Executive Officer’s Message Abdulwahab Iesa Al-Rushood In the name of Allah, Most Gracious, Most Merciful Praise be to Allah the Almighty, and Peace and Blessings be upon our Prophet Muhammad (PBUH), his family and companions.
By the grace of Allah, Kuwait Finance House (KFH) demonstrated its robust organizational structure and successful business model during 2022. KFH improved performance efficiency, maximized solvency, developed and diversified the base of products, services and human talents. As well, KFH led competition and increased its market share, reflecting customers’ confidence and constant leadership.
KFH continued its growth, taking into consideration the global and local economic developments, while following risk and strategy policies, governance standards as well as the Islamic Shari’a principles. The Bank has constantly focused on innovation, digitalization and banking technology to maintain its standing as the best bank for current and potential customers. KFH capped off its efforts with the successful completion of AUB-Bahrain acquisition deal, a major advance, and a strategic shift in KFH’s business journey.
Financial indicators
KFH has achieved major growth in key financial indicators reflecting strong performance and financial robustness as well as the success of policies and plans that are being implemented. The indicators also reflect KFH’s balanced performance and sustainable growth in all main budget items, with a clear increase in operating income, a reduction in expenses and rationalization of spending as well as a growth in the volume of assets, deposits, capital ratios and other items listed in the financial statements included in the 2022 Annual Report.
On another front, we emphasize the importance of maintaining a good dividend policy, as I have full confidence in KFH’s solid financial position and the Group’s ability to continue generating profits and rewarding its shareholders.